Washington County Summit 2009

Washington CountyEconomic Summit 2009

“In economics, the majority is always wrong.”

“The conventional view serves to protect us from the painful job of

thinking.” John Kenneth Galbraith

Consumer Confidence

U.S. Annual Percent Change in Real GDP

-15%

-10%

-5%

0%

5%

10%

15%

20%

1930 1937 1944 1951 1958 1965 1972 1979 1986 1993 2000 2007

Fourth Qtr 2007-Third Qtr 2008 compared to the previous four quarters.Source: U.S. Bureau of Economic Analysis.

*

U.S. Quarterly Percent Change in Real GDP

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2000 2001 2002 2003 2004 2005 2006 2007 2008Source: U.S. Bureau of Economic Analysis.

Most current four quarters comparedComparative year-ago quarters—up 1.9%

“It's a recession when your neighbor loses his job; it's a depression when

you lose yours.”

Harry Truman

My Not-So-Secret Formula

Year-Over Percent Change in Nonfarm Jobs.Year-Over Percent Change in Nonfarm Jobs. “Year-over” change between one month and the

same month the previous year. (March 2008 employment compared to March 2007 employment).

Employment data is current and some of the best data around.

It’s easy. Available for small areas. Not what the Bureau of Labor publishes in their

press release—not seasonally adjusted.

Most Importantly. . .

It works!Nationally, when

year-over growth rates trend down and eventually result in job loss, there has always a recession as defined by NBER.

Source: U.S. Bureau of Labor Statistics.

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1929 1931 1933 1935 1937

Total Employment Nonfarm Jobs

Employment Change During the Great Depression

21% Loss Peak to Trough

27% Loss Peak to Trough

U.S. Year-Over Change in Nonfarm Jobs


-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

1950 1952 1954 1956 1958 1960 1962 1964 1966 1968

Recessionary period as determined by the National Bureau of Economic Research.

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988






-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010


1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 20101970 1972 1974 1976 1978 1980 1982 1984 1986 1988-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

1950 1952 1954 1956 1958 1960 1962 1964 1966 1968




Recessionary Employment Losses Using Annual Data

-21.0%

-4.8%

-2.4% -2.9%-0.4%

-1.7% -1.8% -1.0% -1.4%


U.S. Unemployment Rates

0%

5%

10%

15%

20%

25%

1929 1936 1943 1950 1957 1964 1971 1978 1985 1992 1999 2006


Other National Indicators

Other Indicators

Year-over Change in Real Manufacturing Sales

-15%

-10%

-5%

0%

5%

10%

15%

1993 1995 1997 1999 2001 2003 2005 2007

Source: U.S. Bureau of Economic Analysis.

Year-over Change in Real Retail Sales

-5%-3%

-1%1%

3%5%7%

9%11%

13%15%

1993 1995 1997 1999 2001 2003 2005 2007

Source: U.S. Bureau of Economic Analysis.

Most of the decline in durablegoods—particularly motor vehicles.

Utah Unemployment Insurance Weeks Claimed

0

5,000

10,000

15,000

20,000

25,000

30,000

1/3/

1987

1/3/

1988

1/3/

1989

1/3/

1990

1/3/

1991

1/3/

1992

1/3/

1993

1/3/

1994

1/3/

1995

1/3/

1996

1/3/

1997

1/3/

1998

1/3/

1999

1/3/

2000

1/3/

2001

1/3/

2002

1/3/

2003

1/3/

2004

1/3/

2005

1/3/

2006

1/3/

2007

1/3/

2008

Source: Utah Department of Workforce Services.

Utah Insured Unemployment Rate

0

0.5

1

1.5

2

2.5

3

3.5

4

4.51/3

/1987

1/3

/1989

1/3

/1991

1/3

/1993

1/3

/1995

1/3

/1997

1/3

/1999

1/3

/2001

1/3

/2003

1/3

/2005

1/3

/2007


Year-over Change in Consumer Price Index (All Urban Consumers)

0%

1%

2%

3%

4%

5%

6%

Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008


Year-over Change in Consumer Price Index for Gasoline (All Urban Consumers)

-40%-30%

-20%-10%

0%10%20%

30%40%

50%60%

Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008


Stretching the economy to accommodate new workers

Stretching the economy to accommodate new workers

(150,000) (100,000) (50,000) 0 50,000 100,000 150,000

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85+

Population

Source: U.S. Bureau of the Census

(15) (10) (5) 0 5 10 15

0-4

5-9

10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85+

Population

FemaleMale FemaleMale

Millions

Dominating the Labor Force

Worker Vacuum

Worker Vacuum

Population by Age and Sex: 2005

U.S.Utah

Other Indicators

Why are we so gloomy about the economy?

Well, we are in a recession. . .

Financial Crisis Political/Economic

Leaders Spin and TMI Economics that hit our

everyday lives: High food/gasoline

prices. 401ks have taken a

hit. Problems in the

housing market.

Remember this. . .

Our brains have a negative bias.

We pay more attention to

negative information than positive information.

Laws of supply and demand cause the media to play into that bias.

Behavioral Economics

Classic herd behaviors are can come into play, leading to many, many people taking measures like dumping stock, and lining up outside banks when they don't need to. (Or investing in a bubble housing market.)

These behaviors can actually exacerbate the problems for everyone, causing tornado-like spirals that suck in even wider swaths of people.

We think the “herd” knows more than we do. . .when they really don’t.

Listen to Mom. . .

If everyone else jumped off a cliff, would you jump off it too?

“We have always known that heedless self-interest was bad morals; we now know that it is

bad economics.”

Franklin Delano Roosevelt

Reality Check. . .

We are in a recession. Job losses aren’t over. Housing prices must

adjust to a true market equilibrium—this will take time. Housing bubbles collapse slowly.

Foreclosures Overbuilding Credit problems

The market will make us atone for the excesses of the past few years.

The government cannot save us from economic pain.

“Men have been swindled by other men on many occasions. The autumn

of 1929 was, perhaps, the first occasion when men succeeded on a

large scale in swindling themselves.” John Kenneth Galbraith

HOWEVER. . .

There is nothing in the data to suggest we’re headed for a great depression.

Our economy is different; government safety-nets have evolved—we understand the economy somewhat better.

Gasoline prices have dropped; food prices should follow—increase in purchasing power.

Out-migration of undocumented workers may provide a buffer. Demographics mean we don’t need as many new jobs

nationally; more workers per family. Banks freeing up credit to each other and the public. Housing is now more affordable. The economy will recover. Stock prices will come back.

The Self-Fulfilling Prophecy

If we believe we’re headed for a “great depression” and act accordingly, we can exacerbate the current recession. . .

Currently, the economy is being driven by panic and fear rather than reality.

Remember that to work properly, markets must present both the possibility of profit and LOSS.

Expectations and the Jobless Recovery

-2%

-1%

0%

1%

2%

3%

1999 2000 2001 2002 2003 2004 2005 2006 2007

Year-over Growth in U.S.Nonfarm Jobs


March 19, 2003

“The stock market and economy are two different

things.”

Milton Friedman

Source: Utah Population Estimates Committee.

0%

2%

4%

6%

8%

10%

12%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Annual Population Change

Washington County

Utah

Population Change 2007-2008

5.7%5.4%

4.5%4.1%4.1%4.0%4.0%

3.7%3.6%

3.5%3.5%3.4%

3.0%2.7%2.7%

2.6%2.6%

2.2%2.2%

2.0%1.9%

1.7%1.4%

1.1%1.0%

0.9%0.9%

0.6%0.1%

-0.5%

UintahRichPiute

MorganWasatchSummit

JuabDuchesne

UtahGarfield

KaneIron

TooeleWashington

San JuanCache

Box ElderGrand

State of UtahDavis

SanpeteWeberEmery

Salt LakeMillardBeaverSevier

CarbonWayne

DaggettSource: Utah Population Estimates Committee.

In 2007, Washington Countywas the second-fastest growingcounty in Utah.

Washington County Net Migration

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1980 1985 1990 1995 2000 2005

Source: Utah Population Estimates Committee.

85,500

18,100

4,900

5,600

1,300

90,436

14,796

6,937

1,546

16369

3458

7866

366

9,180

103,028

Did Not Move

Moved WithinWashington

County

Moved from OtherUtah Counties

Moved from OtherStates

Moved FromAbroad

2004-2005

2005-2006

2006-2007

Source: U.S. Census Bureau, American Community Survey.

Migration of Washington County Residents

-7%-6%-5%-4%-2%-1%0%1%2%4%5%6%7%8%

10%11%12%

Jul Jan 2006 Jul Jan 2007 Jul Jan 2008 Jul

Year-Over Change in Nonfarm Jobs

Washington County


-7%-6%-5%-4%-3%-2%-1%0%1%2%3%4%5%6%7%8%9%

10%11%12%

Jul Oct Jan2006

Apr Jul Oct Jan2007

Apr Jul Oct Jan2008

Apr Jul Oct

Year-Over Change in Nonfarm Jobs

Washington County

Source: Utah Department of Workforce Services; U.S. Bureau of Labor Statistics.

UtahUnited States

Nonfarm Job Growth


-5%

0%

5%

10%

15%

20%

Washington County

Utah

U.S.

Washington County Nonfarm Job Growth


-5%

0%

5%

10%

15%

20%

1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Down roughly 1,900 jobs in 2008—3.5%

Washington County Construction Employment


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2001 2002 2003 2004 2005 2006 2007 2008

Washington County Year-Over Change in Construction Employment


-40%

-30%

-20%

-10%

0%

10%

20%

30%

2002 2003 2004 2005 2006 2007 2008

Washington Industry Year-Over Job ChangeSeptember 2007

65

-7

97

293

-33

12

-62

354

326

79

26

264

-24

39

Mining

Construction

Manufacturing

Wholesale Trade

Retail Trade

Transportation

Utilities

Information

Financial Activities

Prof/Business SvcsEducation/Health/Social

SvcsLeisure/Hospitality

Other Services

Government

Source: Utah Dept of Workforce Services.

Washington Industry Year-Over Job ChangeSeptember 2008

-46

-2,832

-15

-284

-17

7

26

-286

343

-153

-71

439

-165

-163

Mining

Construction

Manufacturing

Wholesale Trade

Retail Trade

Transportation

Utilities

Information


Prof/Business SvcsEducation/Health/Social

SvcsLeisure/Hospitality

Other Services

Government

Source: Utah Dept of Workforce Services.

Down 3,200 jobs total

Percent Change in Washington County Nonfarm Jobs by Industry;

September 2007 – September 2008


7%

-5%

-2%

5%

-7%

-7%

3%

8%

-1%

-4%

-1%

-5%

-33%

-15%

-6%

Government

Other Services

Leisure/Hospitality

Ed/Health/Social Svcs

Prof/Business Svcs


Information

Utilities

Transportation/Warehousing

Retail Trade

Wholesale Trade

Manufacturing

Construction

Mining

Total

Washington County New Hires and Separations—Four-Qtr Moving Average

8,000

9,000

10,000

11,000

12,000

13,000

14,000

2001 2002 2003 2004 2005 2006 2007

New Hires Separations

Source: U.S. Census Bureau; Local Employment Dynamics Program.

2%

3%

4%

5%

6%

7%

Nov Feb2005

MayAugNov Feb2006

MayAugNov Feb2007

MayAugNov Feb2008

MayAugNov

Washington Utah U.S.

Seasonally Adjusted Unemployment Rates


Annual Unemployment Rates


2%

3%

4%

5%

6%

7%

8%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

U.S

Washington

Utah

Washington County Private Sector Unemployment Insurance Weeks Claimed with

No Earnings – November 2008


13

57

96

194

61

9

2

46

175

23

144

319

1

5

Other Services

Leisure/Hospitality

Ed/Health/Social Svcs

Prof/Business Svcs


Information

Utilities

Transportation/Warehousing

Retail Trade

Wholesale Trade

Manufacturing

Construction

Mining

Covered Agriculture

Total up 250% fromNovember 2007

Growth in Washington County Average Monthly Wage

*First two quarters of 2008.Source: Utah Department of Workforce Services.

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Washington County Average Monthly Wage As a Percent of State


75% 75% 74%76% 78% 78% 78% 77% 78% 78% 76% 76% 76% 77% 77% 79% 80% 79%

1990 1992 1994 1996 1998 2000 2002 2004 2006

“Unfortunately, the hangover may prove to be proportional to the

binge.”

Warren Buffet

Box Elder1.35%

Cache1.45%

Rich

Weber1.78%

Tooele1.87%

Salt Lake1.57%

Morgan

Summit0.58%

Daggett

Utah1.62%

Wasatch1.99% Duchesne

1.05%Uintah0.99%

Juab2.2%

Sanpete1.35%

Carbon1.08%

Emery1.18% Grand

1.53%

Millard1.08%

Piute

Garfield

Sevier1.55%

Wayne

San Juan3.19%

Iron2.37%

Beaver1.34%

Washington2.75%

Kane

Davis1.13%

State Average = 3.2%

1.00% to 1.49%

Less than 1.00%

2.00% or higher

1.50% to 1.99%

Source: NY Federal Reserve Bank; Trans Union, LLC.

Percentage of Residential Mortgage Loans Delinquent for 90–plus Days; 2nd Quarter 2008

Box Elder2.5%

Cache1.5%

Rich0.4%

Weber3.3%

Tooele3.7%

Salt Lake2.8%

Morgan1.3% Summit

0.9%Daggett 1.7%

Utah2.5%

Wasatch2.2% Duchesne

3.0%Uintah3.5%

Juab3.5%

Sanpete3.5%

Carbon3.1%

Emery2.7% Grand

1.5%

Millard3.0%

Piute1.1%

Garfield3.0%

Sevier2.7%

Wayne0.5%

San Juan3.4%

Iron2.6%

Beaver3.3%

Washington3.5%

Kane1.6%

Davis2.2%

2.00% to 2.99%

1.00% to 1.99%

3.50% or higher

3.00% to 3.49%

Source: U.S. Department of Housing and Urban Development.

Foreclosure Rate Estimates; June 2008

Less than 1.00%

Year-over Change in MSA Area Housing Price Index (HPI)

-30

-20

-10

0

10

20

30

40

50

Pe

rce

nt

Ch

an

ge

1988 1991 1994 1997 2000 2003 2006

St. George Salt Lake Las Vegas

Source: Office of Federal Housing Enterprise Oversight, http://www.ofheo.gov/hpi.aspx.

Year-over Change in Housing Price Index (HPI) Compared to Annual Change in Average Monthly Wage

-5%

0%

5%

10%

15%

20%

25%

30%

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Avg Monthly Wage HPI

Source: Office of Federal Housing Enterprise Oversight, Utah Department of Workforce Services.

“There are two times in a man's life when he should

not speculate: when he can't afford it, and when he can.”

Mark Twain

Housing Affordability is Improving

0

10

20

30

40

50

60

1stQtr

2006

2ndQtr

3rdQtr

4thQtr

1stQtr

2007

2ndQtr

3rdQtr

4thQtr

1stQtr

2008

2ndQtr

3rdQtr

Washington County U.S.Source: National Association of Homebuilders; Wells Fargo Bank.

Housing Opportunity Index—% of homes which are affordableto families with the median income.

Washington County Dwelling Unit Permits

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

*Forecast based on January-November data.Source: U of U; Utah Bureau of Economic and Business Research.

Lowest number since 1989. . .

Annual Change in Washington County New Dwelling Unit Permits


-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

*January-November 2007 compared to January-November 2008.

Percent Change in Washington County Total Permit Authorized Construction Values

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

1992 1994 1996 1998 2000 2002 2004 2006 2008*

*January–November 2007 compared to January-November 2008Source: Utah Bureau of Business and Economic Research.

Change in Number of Washington County Homes Sold

Source: Utah Association of Realtors.

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

*Third Qtr 2008 compared to Third Qtr 2007.

Inventory of homes for saleis slowly shrinking

$458.2

$604.1

$411.8

$351.2

$125.0

$316.4

$235.4

$188.6$178.7$164.5

$157.0$136.3

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*

Washington County New Residential Building Permit Valuation

*Forecast based on January – November data.Source: Utah Bureau of Business and Economic Research.

Millions of $

Lowest number since 1989. . .

2007-2008* Washington County Change in Permitted New Dwelling Units by Community

*January-November.Source: Utah Bureau of Business and Economic Research.

-75%

-63%

-49%

-83%

67%

-92%

160%

-69%

-78%

-68%

-46%

-66%

Enterprise

Hurricane

Ivins

LaVerkin

Leeds

Santa Clara

Springdale

St. George

Virgin

Washington City

Other

Total

$16.1

$44.3

$32.0

$75.2

$51.7

$84.8

$30.7$37.4

$68.9

$39.6

$109.6

$43.6

$107.5

$118.2

$176.9

$143.4

$120.0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*

Washington County New Nonresidential Building Permit Valuation

*Forecast based on January - November.Source: Utah Bureau of Business and Economic Research.

Millions of $

-3% -3%

-14%-17%

0%

-4%

3%

7%

13%

21%21%

25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

3rdQtr

2005

4thQtr

1st Qtr2006

2ndQtr

3rdQtr

4thQtr

1st Qtr2007

2ndQtr

3rdQtr

1st Qtr2008

2ndQtr

3rdQtr

Washington County Change in Gross Taxable Sales

Big declines in building/garden, furniture and auto sales.

Source: Utah State Tax Commission.

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

1stQtr

2002

1stQtr

2003

1stQtr

2004

1stQtr

2005

1stQtr

2006

1stQtr

2007

1stQtr

2008

Washington County Change in Car/Light Truck Sales

Source: Utah State Tax Commission.

When will the recession end?

Economists are pessimists: they've predicted eight of the last three recessions.

Isn't it strange? The same people

who laugh at gypsy fortune tellers take

economists seriously.

The only function of economic forecasting is to make astrology look respectable. John Kenneth Galbraith

In Washington County. . .

Job losses should bottom-out in 1st Qtr 2009.Job losses should bottom-out in 1st Qtr 2009.

Higher unemployment likely in 2009. Higher unemployment likely in 2009.

Housing market adjustment will take longer. Housing market adjustment will take longer.

Market correction related to U.S. recovery. Market correction related to U.S. recovery.

Softening Effects . . .

Out-migration of undocumented workers Out-migration of undocumented workers

Lower prices boosts disposable income. Lower prices boosts disposable income.

Economic Stimulus Package; confidence.Economic Stimulus Package; confidence.

Different economy; different demographics.Different economy; different demographics.

Cautionary Tales . . .

Panic could continue to drive economy.Panic could continue to drive economy.

Housing bubbles collapse slowly. Housing bubbles collapse slowly.

Stimulus package may be timed poorly. Stimulus package may be timed poorly.

Watch the Indicators for a turnaround!!!

Check out our Website:

jobs.utah.govClick on “Economic

Information”Click on “County Info”

What’s Available?

Quarterly NewslettersWage DataEconomic/Demographic ProfileFact SheetsEconomic EventsLargest EmployersLinks to Other Data SourcesUnemployment Rates

This presentation. . .

Will be available for download on our website.jobs.utah.gov

Click on “Economic Information” Then. . . “Publications”

Lecia Parks [email protected]

mailto:[email protected]

Washington County Summit 2009

News & Politics

Transcript of Washington County Summit 2009